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Business confidence plunges further into pessimistic territory in August

New Zealand Business Confidence August 2019

New Zealand: Business confidence plunges further into pessimistic territory in August

August 29, 2019

The ANZ bank business outlook indicator fell by 8.0 points in August, with a net 52.3% of firms reporting that they expect general business conditions to deteriorate this year. The headline reading therefore moved further below the net-0% threshold that separates pessimism from optimism among businesses. August’s result again reflected falling profit expectations, growing concerns over tighter credit conditions, and falling employment intentions.

Meanwhile, firms’ positive outlook regarding their own activity—a metric which has a stronger correlation to GDP growth—declined to an over a decade low of net minus 0.5% in August, after reporting a net 5.0% in July. Notably, the activity outlook for the services and manufacturing sectors deteriorated significantly from the previous month.

FocusEconomics Consensus Forecast panelists expect fixed investment to grow 2.5% in 2019, which is down 0.3 percentage points from last month’s forecast, and 3.0% in 2020.

On 14 May, the government unveiled an NZD 50 billion (USD 30 billion) stimulus package, largely focused on supporting employment in an effort to kickstart the economy following the impact of the coronavirus outbreak and consequent lockdown.

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